Markets

Daily Market Wire 5 November 2020

Lachstock Consulting, November 5, 2020

Oilseed markets firmed while wheat moves were mixed, and US currency weakened.

  • Chicago wheat December contract down US2cents per bushel to 606c;
  • Kansas wheat December contract up 2.75c/bu to 559.75c;
  • Minneapolis wheat December contract up 4.75c/bu to 557c;
  • MATIF wheat December contract up €1.50/t to €206.75;
  • Corn December contract up 4.25c/bu to 405.25c;
  • Soybeans January contract up 22c/bu to 1086.25c;
  • Winnipeg canola January up C$5.30/t to $545.80;
  • MATIF rapeseed February contract up €7/t to €396.25;
  • Brent crude January contract up US$1.51 per barrel to $41.22;
  • Dow Jones index up 368 points to 27,848;
  • AUD firmer at $0.718;
  • CAD firmer at $1.313;
  • EUR firmer at $1.172.

US Election

Markets have spent much of the past 24 hours watching the unfolding chaos of the US presidential election.  Despite talk of a “blue wave”, incumbent President Trump saw a very strong showing, with markets rapidly pricing in a solid win.  The later counting results, mostly from mailed ballots, have switched some of the swing states towards Biden; while there’s still no official winner, he looks likely to scrape through.  Expect to see some continued confusion through the next few days, with legal challenges and recounts the name of the game.  We may not have full confidence in the winner until sometime next week.

Perhaps more significantly for markets, control looks set to be maintained by the Republicans in the Senate, and the Democrats in Congress, leading to a continued split government, regardless of who wins the presidency.  Ideas about a rapid post-election stimulus are looking fairly remote, given the expected political fight between the two chambers.

International

Egypt’s GASC is back in the market for late December and mid January wheat purchases.  The business looks set to go once again to Russian suppliers, with potential for a little EU competition.  After its previous tender which showed firm prices, the question will be how expensive these offers run and how badly Egypt needs to buy the wheat; Egypt rarely buys large volumes at prices higher than previous sales.

New-season wheat remains something of a concern given global weather, with fairly dry maps across central Russia and Ukraine. Some rain is forecast into next week for southern Russia, but there is limited moisture for Hard Red Winter wheat areas in the US.

Brazil has more fairly widespread rain on the forecast for next week, but remains dry overall, and earlier-planted crops are showing moisture stress in many areas already. Fieldwork in Brazil is continuing at a rapid pace.

US ethanol production was up some 20,000 barrels per day to 961,000 barrels, even as stocks continue to grow, and have hit 19.7 million barrels.

Australia

Yesterday’s markets were volatile, with cash bids down heavily and trade markets remained on the offer side. This is due to a combination of risk in the market due to China trade-dispute talk about wheat, and the flow of harvest through northern NSW as growers get a good run.

Cash boards were down $7-15/t through South Australia and along the east coast. Western Australian farmers are back into harvest after being held up for a day or two by rain while in eastern states, harvest pace has picked up with ideal conditions.

 

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